SEATTLE (BLOOMBERG) - Marriott International is facing the prospect that four months of work towards completing a purchase of Starwood Hotels & Resorts Worldwide is about to come undone.

Starwood has received a takeover offer of US$82.75 a share, or US$14 billion (S$19.1 billion), from a group led by China's Anbang Insurance Group Co. That is higher than Marriott's last bid, raising the stakes for the lodging company to counter a second time to save a merger that would create the world's biggest hotel operator. Marriott has planned on the acquisition since November, when Starwood first agreed to be bought by its larger rival in a cash-and-stock deal.

"The time and energy they've invested is not something they're going to happily walk away from," said Mr Tom Baker, corporate managing director at commercial real estate services firm Savills Studley. "It's just a question of can they justify paying more than they've already bid, and at what point does it stop?"

Marriott's options include letting Anbang buy the company it covets; paying a price so high that the merger may become too financially risky; or finding ways to make a more-expensive acquisition pencil out, possibly through property sales. The 89-year-old company, founded by the father of its executive chairman, has been acquiring hotel companies to expand globally, though none of its targets have been as big as Starwood.

"I don't think there is a better way to make this work, unless Marriott arranged the concurrent sale of the real estate for a very high price," Mr David Loeb, an analyst at Robert W. Baird & Co, said in an e-mail. "That is possible but not easy." Starwood owns real estate valued at about US$4 billion, including the St Regis in New York.

Shares of Starwood rose 2 per cent to U$83.75 at the close of trading on Monday (March 28). Starwood's share price includes about US$5.95 a share for the pending spin-off of its timeshare business. Marriott climbed 3.9 per cent to US$71.34.

Starwood said it is in negotiations with the Anbang group after receiving a non-binding offer of US$82.75 a share in cash. Marriott's second stock-and-cash proposal is valued at about US$78 a share, or about US$13.2 billion, based on Monday's closing price.

In Anbang, Marriott chief executive officer Arne Sorenson confronts a 12-year-old Chinese company that has moved aggressively to expand outside its home country, part of a tidal wave of Chinese appetite for foreign assets.

An Anbang-led purchase of Starwood would mark the largest takeover of a US company by a Chinese investor, surpassing the 2013 sale of Smithfield Foods for about US$7 billion.

Marriott reaffirmed its commitment to buying Starwood, which it wants for its loyal pool of guests and brands including Sheraton, Westin and W, saying on Monday that the "previously announced amended merger agreement is the best course for both companies".

The combination of Marriott and Starwood would create a hotel behemoth with about 5,700 properties and 1.1 million rooms.

Mr Sorenson said on March 21, the day that Starwood said it accepted a sweetened offer from Marriott, that its original merger agreement was "amazing" and perhaps "too good" in hindsight because it drew a rival suitor.

Mr Sorenson is aiming to make Marriott bigger, to gain economies of scale and greater bargaining power with online travel agents, and attract younger travellers to compete with upstarts like Airbnb. He joined Marriott 20 years ago after working in mergers and acquisitions at Latham & Watkins in Washington. He got to know chairman Bill Marriott - still addressed as Mr Marriott in public - when he defended the company in a lawsuit.

Mr Sorenson, who has been CEO since 2012, is only the third CEO in Marriott's history and the first non-Marriott family member to lead the company.

Marriott has room to raise its offer for Starwood yet again, Mr Christopher Agnew, an analyst at MKM Partners, said in a research report on Monday.

"We believe Marriott could bump its cash offer by a couple of dollars to regain its position as having a superior" bid, he said.

But some analysts, including Lukas Hartwich of Green Street Advisors, see Marriott as having limited scope to increase its offer without turning a potential win into a Pyrrhic victory.

"Based on the synergies Marriott has outlined, it doesn't seem likely they could match the Anbang consortium's price without giving away most/all of the value they expect to create by combining the two companies," Mr Hartwich said in an e-mail.

If Anbang's new offer becomes binding, the likely end result will be "Marriott walking away from this process and simply collecting its US$450 million breakup fee", said Mr Joseph Greff, an analyst with JPMorgan Chase & Co.

If Marriott does raise its bid again, "investors will be faced with a choice of sacrificing additional upside for certainty of closing and the opportunity to participate in upside of the combined entity", wrote Mr Agnew of MKM Partners. "Anbang's offer needs to be at least US$4 to US$5 over Marriott's to be deemed superior, given the timing and participation advantages Marriott has."

"There's no question we're on a wild ride," Starwood CEO Tom Mangas said in a message to workers, disclosed in a Securities and Exchange Commission filing on Monday. "We're all going to have to be resilient and await the outcome together."